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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 19, 2000
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Connectivity Technologies Inc.
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(exact name of registrant as specified in its charter)
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Delaware 0-12113 94-2691724
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) No.)
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c/o Craig & Macauley, P.C., 600 Atlantic Avenue, Boston, Massachusetts 02210-2211
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(Address of principal executive offices) (zip code)
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Registrant's Telephone Number, including Area Code: (617) 367-9500
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680 Mechanic Street, Ste. 1201, PO Box 786, Leominster, Massachusetts 01453
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 19, 2000 (the "Closing Date"), Connectivity Technologies
Inc., a Delaware corporation (the "Company" or the "Registrant"), Connectivity
Products Incorporated, a Delaware corporation and a 98% owned subsidiary of the
Registrant ("CPI"), the Company's only operating subsidiary, Rome Group, Inc., a
Delaware corporation ("Parent"), and RGCP Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("Sub") entered into an
Agreement and Plan of Merger (the "Agreement and Plan of Merger") pursuant to
which Sub merged (the "Merger") with and into CPI, with CPI surviving as a
wholly owned subsidiary of Parent as of the Closing Date.
CPI is engaged in the manufacture and assembly of wire and cable
products and maintains operations in Leominster, Massachusetts and Auburn Hills,
Michigan. CPI's assets, all of which were acquired by Parent in connection with
the Merger, principally include (i) trade accounts receivable, (ii) inventories,
(iii) leasehold interests in real property, including improvements and fixtures,
(iv) furniture, fixtures and equipment, (v) cash, marketable securities,
deposits and prepaid expenses, and (vi) office, operating and other supplies.
The Company intends to maintain its status as a public corporation
and to seek to acquire other operating assets. No assurance may be given that
such operating assets will be located or that if such assets are located that
the Company will be able to obtain sufficient and acceptable financing to
acquire them. Unless and until such operating assets are located and acquired,
the only revenue anticipated by the Company will be payments of principal and
interest under the Subordinated Notes described below. No assurance can be given
that this revenue will be adequate to meet day to day expenses which are
expected to be primarily administrative costs such as accounting, insurance and
similar charges. The Company would plan to borrow to meet any shortfall but no
assurance can be given that such borrowings will available on terms deemed
acceptable by the Company. The Company expects to retain its substantial net
operating losses for tax purposes.
In consideration for the Merger, the Company received the
following: (i) a subordinated promissory note from Parent in the principal
amount of $1,750,000 (the "$1,750,000 Note"); (ii) an additional subordinated
promissory note of Parent in the principal amount of approximately $584,000,
representing the approximate amount of the tax refund received in respect of a
consolidated federal income tax return filed by the group consisting of the
Company and CPI and retained by CTI (the "Tax Refund Note", together with the
$1,750,000 Note, the "Subordinated Notes"); and (iii) a cash payment from CPI
estimated at $184,700, net of certain transaction related expenses. Interest
only shall be payable on a monthly basis for one year under the Subordinated
Notes at a rate equal to Fleet National Bank's Prime Rate plus 1/4% for a term
of four years. Thereafter, in addition to interest, monthly payments of
principal shall be due in the amount of approximately $48,600 and $16,000 under
the $1,750,000 Note and the Tax Refund Note, respectively. The Company may
receive an additional promissory note with similar terms to the Subordinated
Notes of up to approximately $200,000 if further tax refunds are received. All
of the foregoing notes are subordinated to CPI's lenders and former lenders
under terms of subordination agreements that would prevent payment of principal
and interest to the Company
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in the event of default by Parent on its obligations to those lenders. In the
case of the Tax Refund Note, payments to the Company cannot be made thereunder
until the aggregate outstanding principal balance under the Bank Notes (as
defined below) has been reduced to $250,000. No assurance can be given that the
Company will receive all or any part of the principal and interest of any of the
foregoing notes. The Company incurred a substantial capital loss in connection
with the sale of CPI.
Immediately prior to the closing under the Agreement and Plan of
Merger (the "Closing"), CPI's indebtedness to its bank lenders was approximately
$16,000,000. This amount was satisfied by funds from Parent and two promissory
notes of Parent each in the principal amount of $500,000 (the "Bank Notes"). The
Company has no further payment obligations to CPI's lenders.
Under the Agreement and Plan of Merger, the Company has agreed to
audit CPI's employee benefit plans and to take such actions, if any, to bring
them into compliance with applicable requirements.
At the Closing, Parent assumed and satisfied certain monetary
obligations of CPI to an executive of CPI, who was also a member of the group
from whom the Company acquired its interest in CPI, and the executive agreed to
transfer back to CPI subordinated notes and shares of CPI Common Stock held by
the executive. The Company also paid $25,000 to the executive at Closing. In
addition, the parties exchanged general releases and indemnifications. In
connection with the Merger, Parent also made payments to certain other
executives of CPI.
The purchase price for the Merger was determined through
negotiations between the parties. Other than an obligation of CPI to an
affiliate of Parent in connection with the purchase of raw materials, prior to
the transactions described herein, there was no material relationship between
Parent or Sub and the Registrant or CPI or any of their respective affiliates,
directors or officers, or any associate of any such officer or director.
SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
This Report contains, in addition to historical information,
forward-looking statements including, but not limited to, information relating
to the Company's tax loss carry-forward, the Company's intention to locate and
acquire other operating assets and to the sufficiency of the Company's working
capital and sources of revenue. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of numerous
factors and risks. Reference is made to the reports of the Company filed with
the Securities and Exchange Commission for further information. Any
forward-looking statements are made pursuant to the Private Securities
Litigation Reform Act of 1995, and, as such, speak only as of the date made.
The Company is not undertaking to update any such reports or statements.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Pro Forma Condensed Consolidated Balance Sheet - March 31, 2000*
Notes to Pro Forma Condensed Consolidated Balance Sheet*
Pro Forma Consolidated Income Statement for the Three Months Ended
March 31, 2000*
Pro Forma Revised Historical Consolidated Balance Sheet - December
31, 1999*
Pro Forma Revised Pro Forma Consolidated Income Statement for the
Year Ended December 31, 1999*
Notes to Pro Forma Consolidated Income Statement*
(c) Exhibits
2.1 Agreement and Plan of Merger dated as of May 19, 2000 (the
"Agreement and Plan of Merger") by and among, Connectivity
Technologies, Inc., a Delaware corporation (the "Company" or the
"Registrant"), Connectivity Products Incorporated, a Delaware
corporation and a 98% owned subsidiary of the Registrant ("CPI"),
Rome Group, Inc., a Delaware corporation ("Parent"), and RGCP
Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"). (A list of exhibits and schedules to
the Agreement and Plan of Merger is set forth therein. The
Registrant agrees to furnish to the Commission supplementally, upon
request, a copy of any such exhibits or schedules not otherwise
filed herewith.).
10.1 Subordinated Merger Note Due 2004 dated May 19, 2000 in the
principal amount of $1,750,000.00 made by Rome Group, Inc. payable
to Connectivity Technologies Inc.
10.2 Subordinated Tax Refund Note No. 1 Due 2004 dated May 22, 2000
in the principal amount of $584,243.00 made by Rome Group, Inc.
payable to Connectivity Technologies Inc.
10.3 Subordination Agreement dated as of May 19, 2000 by and among
Connectivity Technologies Inc., Connectivity Products Incorporated,
Rome Group, Inc. and Rome Cable Corporation.
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* To be filed by amendment
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10.4 Subordination Agreement dated as of May 19, 2000 by and among
Fleet National Bank, Bank One, Michigan, Connectivity Technologies
Inc. and Rome Group, Inc.
10.5 Tax Refund Agreement dated as of May 17,2000 by and among Rome
Group, Inc., RGCP Acquisition Corp., Connectivity Products
Incorporated, Connectivity Technologies Inc., Fleet National Bank
and Bank One Michigan.
10.6 Cross-Release dated as of May 19, 2000 by and among Rome Group,
Inc., RGCP Acquisition Corp., Connectivity Products Incorporated and
Connectivity Technologies Inc.
10.7 Indemnity Agreement dated as of May 19, 2000 by and among
Connectivity Technologies Inc., Rome Group, Inc. and Connectivity
Products Incorporated.
10.8 Remediation Agreement dated as of May 19, 2000 by and among
Rome Group, Inc., Connectivity Technologies Inc. and Connectivity
Products Incorporated.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
CONNECTIVITY TECHNOLOGIES INC.
(Registrant)
Dated: June 5, 2000 By: /s/ George Buckham
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Name: George Buckham
Title: Secretary
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